EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT 10.16
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this “Agreement”) is made as of the 20th day of February, 2004 by and among Mobilepro Corp., a Delaware corporation (the “Company”), and Xxxx X. Xxxxxx, a natural person, residing in Virginia (“Xx. Xxxxxx”).
WHEREAS, the Company wishes to employ Xx. Xxxxxx as its Chief Financial Officer and Xx. Xxxxxx wishes to accept such employment;
WHEREAS, the Company and Xx. Xxxxxx wish to set forth the terms of Xx. Xxxxxx’x employment and certain additional agreements between Xx. Xxxxxx and the Company.
NOW, THEREFORE, in consideration of the foregoing recitals and the representations, covenants and terms contained herein, the parties hereto agree as follows:
1. Employment Period
The Company will employ Xx. Xxxxxx, and Xx. Xxxxxx will serve the Company, under the terms of this Agreement commencing March 1, 2004 (the “Commencement Date”) for a term of twenty-four (24) months unless earlier terminated under Section 4 hereof. The period of time between the commencement and the termination of Xx. Xxxxxx’x employment hereunder shall be referred to herein as the “Employment Period.”
2. Duties and Status
The Company hereby engages Xx. Xxxxxx as its Chief Financial Officer on the terms and conditions set forth in this Agreement. During the term of the Employment Period, Xx. Xxxxxx shall report directly to the Chief Executive Officer of the Company and shall exercise such authority, perform such executive functions and discharge such responsibilities as are reasonably associated with Xx. Xxxxxx’x position, commensurate with the authority vested in Xx. Xxxxxx pursuant to this Agreement and consistent with the governing documents of the Company. These duties include, but are not limited to: (i) being responsible for all the financial, accounting and related aspects of the Company, including the preparation and filing of the Company’s SEC filings; (ii) managing the Company’s outside auditors and the audit process of the Company and companies which the Company or its affiliates acquires; (iii) assisting the CEO in seeking and closing acquisitions for the Company to grow the Company’s revenues and earnings per share; (iv) working with the CEO to build the Company’s presence on “Wall Street” and otherwise identifying and closing sources of capital to help build the Company’s business; (v) identifying and recruiting additional personnel to build the Company; and (vi) handling such other leadership, administrative and managerial roles as is customary and appropriate for a company’s Chief Financial Officer.
3. Compensation and Benefits
| (a) | Salary. During the Employment Period, the Company shall pay to Xx. Xxxxxx, as compensation for the performance of his duties and obligations under this Agreement, a base salary of Thirteen Thousand Dollars ($13,000) per month, payable semi-monthly. The base salary will be increased to Fifteen Thousand Dollars ($15,000) per month in the month following the Company achieving an annualized gross revenue run rate of $6 million. | |||
| (b) | Bonus. During the Employment Period, Xx. Xxxxxx shall be entitled to a bonus equal to one percent (1%) of the revenues for the most recent twelve (12) month period of each acquisition made by the Company during the Employment. Bonuses shall be paid in cash on all acquisitions closed after February 20, 2004. An acquisition shall be deemed “made” if a definitive agreement is executed during the Employment Period and the transaction closes within six (6) months after the definitive agreement is executed. | |||
| (c) | Equity. As partial consideration for entering into this Agreement, the Company hereby grants Xx. Xxxxxx a warrant to acquire six million five hundred thousand (6,500,000) shares of the Company’s common stock at an exercise price or $0.018 per share (the “Warrant Shares”) to vest as follows. (i) five hundred thousand (500,000) Warrant Shares on March 1, 2004; (2) two million seven hundred fifty thousand (2,750,000) Warrant Shares ratably over the remaining twenty-four (24) months of the Agreement, or immediately if Xx. Xxxxxx’x employment is terminated without cause or for good reason (as described in Section 4 hereof) or due to a change in control, sale of a majority of the common stock or substantially all of the assets of the Company or merger of the Company into or with another company (unless such company is less than ninety percent (90%) of the size (measured by market value) of the Company) or reverse merger with another company; and (iii) two million two hundred and fifty thousand (2,250,000) Warrant Shares vest immediately upon the Company achieving a $25 million market cap for ten (10) consecutive trading days and a price per share of not less than $0.07. The Warrant Shares granted hereunder must be exercised by the tenth anniversary of the date of vesting or shall be forfeited by Xx. Xxxxxx. All Warrant Shares granted hereunder shall have a “cashless” exercise provision which enables Xx. Xxxxxx to give up a portion of his Warrant Shares in order to exercise others without paying cash for them. Further, the number, kind and strike price of the stock Warrant Shares granted hereunder shall be appropriately and equitably adjusted to reflect any stock dividend, stock split, spin-off, split-off, extraordinary cash dividend, | |||
-2-
| recapitalization, reclassification or other major corporate action affecting the stock of the Company to the end that after such event Xx. Xxxxxx’x proportionate interest in the Company shall be maintained as before the occurrence of such event. Xx. Xxxxxx shall also receive payment of any cash dividend or stock dividend declared and paid by the Company as if Xx. Xxxxxx had already exercised all of his Warrant Shares, including unvested Warrant Shares. | ||||
| (d) | Other Benefits. During the Employment Period, Xx. Xxxxxx shall be entitled to participate in all of the employee benefit plans, programs and arrangements of the Company in effect during the Employment Period which are generally available to senior executives of the Company, subject to and on a basis consistent with the terms, conditions and overall administration of such plans, programs and arrangements. In addition, during the Employment Period, Xx. Xxxxxx shall be entitled to fringe benefits and perquisites comparable to those of other senior executives of the Company including, but not limited to, ten (10) days of vacation pay plus five (5) sick/personal days, to be used in accordance with the Company’s vacation pay policy for senior executives. | |||
| (e) | Business Expenses. During the Employment Period, the Company shall promptly reimburse Xx. Xxxxxx for all appropriately documented, reasonable business expenses incurred by Xx. Xxxxxx in the performance of his duties under this Agreement, including telecommunications expenses and travel expenses. | |||
| (f) | Office. During the Employment Period, the Company shall provide an office at a place mutually agreeable to Xx. Xxxxxx and the Company and, to the extent that the Company’s budget allows, secretarial assistance to Xx. Xxxxxx suitable to Xx. Xxxxxx’x position as the Company’s Chief Financial Officer. Xx. Xxxxxx agrees that the Company’s existing offices at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx 00000 are sufficient to satisfy this convenant. | |||
4. Termination of Employment
| (a) | Termination for Cause. The Company may terminate Xx. Xxxxxx’x employment hereunder for Cause (defined below). For purposes of this Agreement and subject to Xx. Xxxxxx’x opportunity to cure as provided in Section 4(c) hereof, the Company shall have Cause to terminate Xx. Xxxxxx’x employment hereunder if such termination shall be the result of: |
(i) a material breach of fiduciary duty or material breach of the terms of this Agreement or any other agreement between Mr.
-3-
Xxxxxx and the Company (including without limitation any agreements regarding confidentiality, inventions assignment and non-competition), which, in the case of a material breach of the terms of this Agreement or any other agreement, remains uncured for a period of thirty (30) days following receipt of written notice from the Board specifying the nature of such breach;
(ii) the commission by Xx. Xxxxxx of any act of embezzlement, fraud, larceny or theft on or from the Company;
(iii) substantial and continuing neglect or inattention by Xx. Xxxxxx of the duties of his employment or the willful misconduct or gross negligence of Xx. Xxxxxx in connection with the performance of such duties which remains uncured for a period of thirty (30) days following receipt of written notice from the Board specifying the nature of such breach;
(iv) the commission by Xx. Xxxxxx of any crime involving moral turpitude or a felony; and
(v) Xx. Xxxxxx’x performance or omission of any act which, in the judgment of the Board, if known to the customers, clients, stockholders or any regulators of the Company, would have a material and adverse impact on the business of the Company.
| (b) | Termination for Good Reason. Xx. Xxxxxx shall have the right at any time to terminate his employment with the Company upon not less than thirty (30) days prior written notice of termination for Good Reason (defined below). For purposes of this Agreement and subject to the Company’s opportunity to cure as provided in Section 4(c) hereof, Xx. Xxxxxx shall have Good Reason to terminate his employment hereunder if such termination shall be the result of: |
| (i) | The breach by the Company of any material provision of this Agreement; or | |||
| (ii) | A requirement by the Company that Xx. Xxxxxx perform any act or refrain from performing any act that would be in violation of any applicable law. | |||
| (c) | Notice and Opportunity to Cure. Notwithstanding the foregoing, it shall be a condition precedent to the Company’s right to terminate Xx. Xxxxxx’x employment for Cause and Xx. Xxxxxx’x right to terminate for Good Reason that (i) the party seeking termination shall first have given the other party written notice stating with specificity the reason for the termination (“breach”) and (ii) if such breach is susceptible of cure or remedy, a period of fifteen (15) days from and after the giving of such notice shall have elapsed |
-4-
| without the breaching party having effectively cured or remedied such breach during such 15-day period, unless such breach cannot be cured or remedied within fifteen (15) days, in which case the period for remedy or cure shall be extended for a reasonable time (not to exceed an additional thirty (30) days) provided the breaching party has made and continues to make a diligent effort to effect such remedy or cure. | ||||
| (d) | Voluntary Termination. At the election of Xx. Xxxxxx, upon not less than sixty (60) days prior written notice of termination other than for Good Reason. | |||
| (e) | Termination Upon Death or Permanent and Total Disability. The Employment Period shall be terminated by the death of Xx. Xxxxxx. The Employment Period may be terminated by the Board of Directors of the Company if Xx. Xxxxxx shall be rendered incapable of performing his duties to the Company by reason of any medically determined physical or mental impairment that can be reasonably expected to result in death or that can be reasonably be expected to last for a period of either (i) six (6) or more consecutive months from the first date of Xx. Xxxxxx’x absence due to the disability or (ii) nine (9) months during any twelve-month period (a “Permanent and Total Disability”). If the Employment Period is terminated by reason of a Permanent and Total Disability of Xx. Xxxxxx, the Company shall give thirty (30) days’ advance written notice to that effect to Xx. Xxxxxx. | |||
| (f) | Termination Without Cause. At the election of the Company, otherwise than for Cause, upon not less than sixty (60) days written notice of termination. | |||
| (g) | Termination for Business Failure. Anything contained herein to the contrary notwithstanding, in the event the Company’s business is discontinued because continuation is rendered impracticable by substantial financial losses, lack of funding, legal decisions, administrative rulings, declaration of war, dissolution, national or local economic depression or crisis or any reasons beyond the control of the Company, then this Agreement shall terminate as of the day the Company determines to cease operation with the same force and effect as if such day of the month were originally set as the termination date hereof. In the event this Agreement is terminated pursuant to this Section 4(g), the Executive will not be entitled to severance pay. | |||
-5-
5. Consequences of Termination
| (a) | Without Cause or for Good Reason. In the event of a termination of Xx. Xxxxxx’x employment during the Employment Period by the Company other than for Cause pursuant to Section 4(f) or by Xx. Xxxxxx for Good Reason pursuant to Section 4(b) (e.g., due to a Change of Control of the Company, where Change of Control means: (i) the acquisition (other than from the Company) in one or more transactions by any Person, as defined in this Section 5(a), of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 50% or more of (A) the then outstanding shares of the securities of the Company, or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Company Voting Stock”); (ii) the closing of a sale or other conveyance of all or substantially all of the assets of the Company; or (iii) the effective time of any merger, share exchange, consolidation, or other business combination of the Company if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity) are not persons who, immediately prior to such transaction, held the Company Voting Stock; provided, however, that a Change of Control shall not include a public offering of capital stock of the Company. For purposes of this Section 5(a), a “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than: employee benefit plans sponsored or maintained by the Company and corporations controlled by the Company, the Company shall pay Xx. Xxxxxx (or his estate) and provide him with the following: |
| (i) | Lump-Sum Payment. A lump-sum cash payment, payable ten (10) days after Xx. Xxxxxx’x termination of employment, equal to the sum of the following: |
| (A) | Salary. The equivalent of six months (the “Severance Period”) of Xx. Xxxxxx’x then-current base salary; plus | |||
| (B) | Earned but Unpaid Amounts. Any previously earned but unpaid salary through Xx. Xxxxxx’x final date of employment with the Company, and any previously earned but unpaid bonus amounts prior to the date of Xx. Xxxxxx’x termination of employment. | |||
-6-
| (C) | Equity. All Warrant Shares vested at time of termination shall be retained by Xx. Xxxxxx. All unvested Warrant Shares shall immediately vest and be retained by Xx. Xxxxxx. Xx. Xxxxxx shall have the benefit of the full ten year option period to exercise such Warrant Shares. |
| (ii) | Other Benefits. The Company shall provide continued coverage for the Severance Period under all health, life, disability and similar employee benefit plans and programs of the Company on the same basis as Xx. Xxxxxx was entitled to participate immediately prior to such termination, provided that Xx. Xxxxxx’x continued participation is possible under the general terms and provisions of such plans and programs. In the event that Xx. Xxxxxx’x participation in any such plan or program is barred, the Company shall use its commercially reasonable efforts to provide Xx. Xxxxxx with benefits substantially similar (including all tax effects) to those which Xx. Xxxxxx would otherwise have been entitled to receive under such plans and programs from which his continued participation is barred. In the event that Xx. Xxxxxx is covered under substitute benefit plans of another employer prior to the expiration of the Severance Period, the Company will no longer be obligated to continue the coverages provided for in this Section 5(a)(ii). |
| (b) | Other Termination of Employment. In the event that Xx. Xxxxxx’x employment with the Company is terminated during the Employment Period by the Company for Cause (as provided for in Section 4(a) hereof) or by Xx. Xxxxxx other than for Good Reason (as provided for in Section 4(b) hereof), the Company shall pay or grant Xx. Xxxxxx any earned but unpaid salary, bonus, and Warrant Shares through Xx. Xxxxxx’x final date of employment with the Company, and the Company shall have no further obligations to Xx. Xxxxxx. | |||
| (c) | Withholding of Taxes. All payments required to be made by the Company to Xx. Xxxxxx under this Agreement shall be subject only to the withholding of such amounts, if any, relating to tax, excise tax and other payroll deductions as may be required by law or regulation. | |||
| (d) | No Other Obligations. The benefits payable to Xx. Xxxxxx under this Agreement are not in lieu of any benefits payable under any employee benefit plan, program or arrangement of the Company, | |||
-7-
| except as specifically provided herein, and Xx. Xxxxxx will receive such benefits or payments, if any, as he may be entitled to receive pursuant to the terms of such plans, programs and arrangements. Except for the obligations of the Company provided by the foregoing and this Section 5, the Company shall have no further obligations to Xx. Xxxxxx upon his termination of employment. | ||||
| (e) | No Mitigation or Offset. Xx. Xxxxxx shall have no obligation to mitigate the damages provided by this Section 5 by seeking substitute employment or otherwise and there shall be no offset of the payments or benefits set forth in this Section 5 except as provided in Section 5(a)(ii). | |||
6. Governing Law
This Agreement and the rights and obligations of the parties hereto shall be construed in accordance with the laws of the State of Maryland, without giving effect to the principles of conflict of laws.
7. Indemnity and Insurance
The Company shall indemnify and save harmless Xx. Xxxxxx for any liability incurred by reason of any act or omission performed by Xx. Xxxxxx while acting in good faith on behalf of the Company and within the scope of the authority of Xx. Xxxxxx pursuant to this Agreement and to the fullest extent provided under the Bylaws, the Certificate of Incorporation and the General Corporation Law of the State of Delaware, except that Xx. Xxxxxx must have in good faith believed that such action was in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such conduct was unlawful
The Company shall provide that Xx. Xxxxxx is covered by any Directors and Officers insurance that the Company provides to other senior executives and/or board members.
8. Non-Disparagement
At all times during the Employment Period and for a period of five (5) years thereafter (regardless of how Xx. Xxxxxx’x employment was terminated), Xx. Xxxxxx shall not, directly or indirectly, make (or cause to be made) to any person any disparaging, derogatory or other negative or false statement about the Company (including its products, services, policies, practices, operations, employees, sales representatives, agents, officers, members, managers, partners or directors).
-8-
9. Cooperation with the Company After Termination of Employment
Following termination of Xx. Xxxxxx’x employment for any reason, Xx. Xxxxxx shall fully cooperate with the Company in all matters relating to the winding up of Xx. Xxxxxx’x pending work on behalf of the Company including, but not limited to, any litigation in which the Company is involved, and the orderly transfer of any such pending work to other employees of the Company as may be designated by the Company. Following any notice of termination of employment by either the Company or Xx. Xxxxxx, the Company shall be entitled to such full time or part time services of Xx. Xxxxxx as the Company may reasonably require during all or any part of the sixty (60)-day period following any notice of termination, provided that Xx. Xxxxxx shall be compensated for such services at the same rate as in effect immediately before the notice of termination.
10. Lock-up Period and Volume Limitation.
Xx. Xxxxxx agrees that he will not sell or otherwise transfer or dispose of any shares of the Company’s common stock that he owns or is entitled to receive following the exercise of any Warrant Shares or convertible securities that he may receive following the Commencement Date until September 1, 2004. Xx. Xxxxxx also agrees that he will not sell or otherwise transfer or dispose of more than one million (1,000,000) shares of the Company’s common stock during any calendar quarter thereafter during the Employment Period.
11. Notice
All notices, requests and other communications pursuant to this Agreement shall be sent by overnight mail to the following addresses:
| If to Xx. Xxxxxx: | ||
| Xxxx X. Xxxxxx | ||
| [INTENTIONALLY OMITTED FROM EXHIBIT] | ||
| If to the Company: | ||
| Mobilepro Corp. | ||
| Attn: CEO | ||
| 0000 Xxxxxxxxx Xxxx. | ||
| Xxxxx 000 | ||
| Xxxxxxxxx, Xxxxxxxx 00000 | ||
| Phone: 000.000.0000 | ||
-9-
12. Waiver of Breach
Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part of either Xx. Xxxxxx or of the Company.
13. Non-Assignment / Successors
Neither party hereto may assign his or its rights or delegate his or its duties under this Agreement without the prior written consent of the other party; provided, however that (i) this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company upon any sale or all or substantially all of the Company’s assets, or upon any merger, consolidation or reorganization of the Company with or into any other corporation, all as though such successors and assigns of the Company and their respective successors and assigns were the Company; and (ii) this Agreement shall inure to the benefit of and be binding upon the heirs, assigns or designees of Xx. Xxxxxx to the extent of any payments due to them hereunder. As used in this Agreement, the term “Company” shall be deemed to refer to any such successor or assign of the Company referred to in the preceding sentence.
14. Severability
To the extent any provision of this Agreement or portion thereof shall be invalid or unenforceable, it shall be considered deleted there from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
15. Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
16. Arbitration
Xx. Xxxxxx and the Company shall submit to mandatory and exclusive binding arbitration, any controversy or claim arising out of, or relating to, this Agreement or any breach hereof where the amount in dispute is greater than or equal to Fifty Thousand Dollars ($50,000), provided, however, that the parties retain their right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining equitable relief from a court having jurisdiction over the parties. In the event the amount of any controversy or claim arising out of, or relating to, this Agreement, or any breach hereof, is less than Fifty Thousand Dollars ($50,000), the parties hereby agree to submit such claim to mediation. Such arbitration shall be governed by the Federal Arbitration Act and conducted through the American Arbitration Association (“AAA”) in the District of Columbia, before a single neutral arbitrator, in accordance with the National
-10-
Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at that time. The parties may conduct only essential discovery prior to the hearing, as defined by the AAA arbitrator. The arbitrator shall issue a written decision which contains the essential findings and conclusions on which the decision is based. Mediation shall be governed by, and conducted through, the AAA. Judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
17. Entire Agreement
This Agreement and all schedules and other attachments hereto constitute the entire agreement by the Company and Xx. Xxxxxx with respect to the subject matter hereof and, except as specifically provided herein, supersedes any and all prior agreements or understandings between Xx. Xxxxxx and the Company with respect to the subject matter hereof, whether written or oral. This Agreement may be amended or modified only by a written instrument executed by Xx. Xxxxxx and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of February 20, 2004.
| XXXX X. XXXXXX | MOBILEPRO CORP. | |||
| By: | ||||
| Its: | ||||
-11-
